Copper’s long-term trends make Freeport worth watching

When the stock price of the world’s largest publicly traded copper producer falls by about a third over five years, it’s worth taking a closer look.

The company is Phoenix-based Freeport-McMoRan Copper & Gold (NYSE: FCX), and part of its problem has been the price of copper, which has dropped from around $3.70 per pound at the start of the year to $3.16 recently. (Gold, too, is down, falling more than 25 percent in the first half of 2013.)

The company is not just focused on copper, gold and other metals, though. Last year it bought McMoRan Exploration and Plains Exploration & Production, adding oil and natural gas assets to its portfolio. Investor opinions are mixed on the move, but it does diversify operations.

Still, it’s much more a copper company than an oil company. On the plus side, lower copper prices are expected to be offset by anticipated improvement in the ore grade coming out of the Grasberg mine in Indonesia this year and next, which should lower the company’s average production cost per pound.

The decline in the share price for this miner is a promising opportunity. Copper is still one of the most highly used metals, and the long-term-demand trend is upward. Consider buying into the company or adding it to your watch list, perhaps while keeping an eye on the integration and performance of the oil business.

Ask the Fool

Question: I’m a beginning investor and have heard that when it comes to mutual funds, I shouldn’t bother with anything but a low-cost index fund. Is that right?

Answer: For most people, a broad-market index fund is perfect. An S&P 500 fund will instantly have you invested in 500 of America’s biggest companies. (Many of them have substantial overseas operations, too, giving you valuable international exposure.) You can go even broader with something like Vanguard’s Total Stock Market Index, which also includes smaller and medium-sized companies, or the Vanguard Total World Stock Index.

Seek index funds with low fees, such as ones from Vanguard, Fidelity, Schwab and others. They often charge less than 0.25 percent annually.

If you want to try to beat the market, you might put some of your money into a few top-notch managed mutual funds, or invest in a few carefully chosen individual stocks. Index funds, though, are the easiest and can get you close to the market’s return, which is great for those without the time, interest or expertise to study funds and stocks. Learn more at fool.com/mutualfunds/mutualfunds.htm.

Q: What is hyperinflation?

A: Americans are used to ordinary inflation, with our prices tending to rise by around 2 percent to 4 percent each year. Some countries have experienced hyperinflation, though, where prices can double in a few days — or hours!

Just a few years ago, for example, Zimbabwe experienced the chaos of hyperinflation, with prices doubling in the time it might take you to read this newspaper page. You might buy a loaf of bread with a bill that sports 12 zeros on it. A month later, you’d need to add several more zeros.

Save more. For 2013, the annual contribution limit for 401(k), 403(b) and 457 plans is $17,500 (plus an additional $5,500 “catch-up” contribution for those 50 or older), and IRAs can now absorb $5,500 per year ($6,500 for those 50 or older). Increasing what you contribute each year by $1,000 is just $83 a month but can add up to nearly $50,000 over 20 years and $125,000 over 30 years (assuming an 8 percent annual return).

Consume less. Cut out just $30 per month (a dollar a day) and add that money to your savings — growing at just 7 percent, it would top $30,000 in 30 years. Growing at the stock market’s long-term average of about 10 percent, it would approach $60,000.

Rein in debt. Your assets need to grow faster than your liabilities. Eliminating high-interest debt should be a top priority.

Turn hobbies into incomes. Is there some activity you enjoy that can generate extra money for you now or in retirement? Earning more now (perhaps by teaching, writing, or even working a few hours at Home Depot) could increase your savings and move up your retirement date. Having a part-time job in retirement also offers benefits.

Run the numbers. Can you afford to retire? Learn what you’ll need to retire by consulting a pro or using online calculators. Visit aarp.org/work/retirement-planning, for example.

Allocate your assets. Any good retirement plan involves deciding how much you’ll have in stocks, bonds, real estate and cash, and how often you’ll adjust your mix. Saving money is critical, but so is where you put that money. Your asset allocation has a huge impact on your portfolio’s ability to support your retirement.

Posting a comment to our website allows you to join in on the conversation. Share your story and unique perspective with members of the azcentral.com community.

Comments posted via facebook:

► Join the Discussion

Join the conversation! To comment on azcentral.com, you must be logged into an active personal account on Facebook. You are responsible for your comments and abuse of this privilege will not be tolerated. We reserve the right, without warning or notification, to remove comments and block users judged to violate our Terms of Service and Rules of Engagement. Facebook comments FAQ

Join thousands of azcentral.com fans on Facebook and get the day's most popular and talked-about Valley news, sports, entertainment and more - right in your newsfeed. You'll see what others are saying about the hot topics of the day.